You might have thought of asking, how does National Debt Relief work? Quite simply, consumers use National Debt Relief as a program for negotiating with their debtors to reduce their debt amounts.
According to the company, consumers manage to reduce their debt amounts by 30% when they complete their debt settlement program. In this article, you’ll get a deeper understanding of how the National Debt Relief program works.
How Does National Debt Relief Work?
To qualify to work with National Debt Relief, you must have unsecured debt of between $7,500 and $100,000 from business debts, credit cards, personal loans, etc. This means that the company can’t help you settle secured debts with collateral such as auto or home loans. Also, it doesn’t help with other loans involving lawsuits, federal student loans and IRS debts.
According to Grant Eckert, National Debt Relief’s chief marketing officer, on average, their clients have a debt that is slightly above $20,000. The company verifies its applicants by doing a soft credit pull on each of the applicants’ outstanding balances and creditors. The verification process doesn’t affect their potential clients’ credit scores.
The company doesn’t provide its services in several states including West Virginia, Connecticut, Vermont, Carolina and Georgia among others. So, it’s advisable to check with them before you apply due to varying state regulations.
You need to open a new savings account when you choose to work with their debt settlement program. Furthermore, you’ll be required to deposit your monthly payments into the separate savings account, instead of paying your creditors.
The company will then determine your total monthly payment level, which is usually lower than what you used to pay for your unsecured debts.
This means that the company will initiate negotiations with your creditors on your behalf and try to convince them to accept the reduced monthly payments. Many creditors are more likely to accept a reduced payment than risking no payment at all.
Therefore, you’ll pay your creditors a lump sum or installment payments from your new savings account.
The Cost And Savings
When the debt is fully settled, National will collect a fee of around 15 to 25% of your enrolled debt. Debt settlement companies such as National Debt Relief and many of its competitors don’t charge their clients an upfront fee. In most cases, the exact amount you’ll have to pay will depend on the amount you owe and the state you live in.
According to Eckert, it’s the clients who choose to stick with their debt settlement program to the end that get to save around 30% including fees. Most of their clients manage to stay until they pay their debts fully.
However, some drop out due to personal reasons including the inability to continue saving. On average, most of their clients often stay for around four years. Within this period they manage to settle their unsecured debts.
Remember, since you stop paying your creditors when you sign up for the debt settlement program, your credit score will fall. However, after you have fully paid your debts and you’re debt-free, you can start working towards improving your credit.
Debt settlement is a tedious, costly process that can destroy your credit. Sticking with a debt settlement program for a long period of around three years will give you some net benefit.
Therefore, if you’re struggling with repaying your creditors or exhausted all other possible options, working with National Debt Relief is a good idea.